According to InvestmentNews, Securities America recently announced that the firm has suspended the sales Phillips Edison-ARC Grocery Center REIT II and Cole Capital Properties V. The two REITS are associated with American Realty Capital Properties (ARCP). The selling suspension of the REITs follows news that U.S. authorities are investigating ARCP for an alleged $23 million accounting error. Reports indicate the FBI and prosecutors from the US attorney’s office in New York are working together on the investigation.
FA-Magazine further reported that ARCP said that they discovered employes “intentionally made” the accounting mistakes that caused the REIT to understate net losses. The company chief account officer and chief financial officers have resigned. Furthermore, as a result of the investigation, shares have dropped more than 30 percent.
According to InvestmentNews, Securities America’s chief marketing officer wrote, “Securities America temporarily suspended all sales in [the two REITs] until our due-diligence team has time to review potential implications of the recent news regarding American Capital Partners.”
Broker dealers have a responsibility to adequately perform due diligence on all investment recommendations to determine a reasonable likelihood of success. In addition brokers are required to make suitable investment recommendations based on the clients age, investment objectives, risk tolerances and net worth. Brokers that sell investment products, like REITs, without performing the necessary due diligence to determine that the investment is a suitable product for their client, can be liable for investment losses.
If you purchased a REIT sponsored by American Realty Capital or one of its affiliated companies and would like to discuss your potential to recover investment losses, please call The White Law Group at 312-238-9650 for a free consultation.
he White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on The White Law Group, visit http://www.WhiteSecuritiesLaw.com.